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STOCKHOLDERS' AGREEMENT
by and among
GLOBAL PHARMACEUTICAL CORPORATION
(known as Impax Laboratories, Inc. at the Effective Time)
and
THE INVESTORS NAMED HEREIN
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STOCKHOLDERS' AGREEMENT, dated as of December ___, 1999, by
and among (i) GLOBAL PHARMACEUTICAL CORPORATION, a Delaware corporation (the
"Company" or "Global"), (ii) XXXXXXX XXXXX ("Xxxxx"), XXXXX XXX ("Xxx") and
XXXXX X. XXXXXXX ("Xxxxxxx") (collectively, the "Key Senior Executives"), (iii)
XXXXXXX US DISCOVERY FUND III, L.P. and XXXXXXX US DISCOVERY OFFSHORE FUND III,
L.P. (collectively, the "Xxxxxxx Funds") and (iv) CHINA DEVELOPMENT INDUSTRIAL
BANK, INC., PRESIDENT (BVI) INTERNATIONAL INVESTMENT HOLDINGS, LTD., CHEMICAL
COMPANY MALAYSIA (BERHAD), EUROC II VENTURE CAPITAL CORP., EUROC III VENTURE
CAPITAL CORP., MULTIVENTURE TECHNOLOGIES, INC. and TAI-I ELECTRIC WIRE & CABLE
CO., LTD. (collectively, the "Impax Stockholders," and together with the Xxxxxxx
Funds, the "Series 1 Stockholders"). The Series 1 Stockholders, any Series 1
Holder and any Transferee are collectively referred to herein as the "Investor
Group" and, individually, an "Investor." Capitalized terms used and not
otherwise defined herein have the respective meanings ascribed thereto in
Article I.
RECITALS
WHEREAS, pursuant to the terms of the Agreement and Plan of
Merger, dated as of June 26, 1999 ( the "Merger Agreement"), by and between
Global and Impax Pharmaceuticals, Inc. ("Impax"), at the Effective Time, (i)
Impax will be merged with and into Global (the "Merger"), with Global being the
surviving corporation in the Merger (with the surviving corporation's name
changed to Impax Laboratories, Inc.) (the "Surviving Corporation" or the
"Company"; the term "Global" shall be used herein solely to refer to the entity
prior to the Merger), (ii) each issued and outstanding share of the common
stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock of Impax will be converted into shares of common stock, $.01 par value, of
the Company ("Company Common Stock"), (iii) each issued and outstanding share of
Series D Preferred Stock of Impax will be converted into shares of Series 1-B
Convertible Preferred Stock of the Company, (iv) each issued and outstanding
share of Series C Convertible Preferred Stock of Global will be converted into
shares of Company Common Stock and (v) each issued and outstanding share of
Series D Convertible Preferred Stock of Global will be converted into shares of
Series 1-A Convertible Preferred Stock of the Company. The Series 1-A
Convertible Preferred Stock and the Series 1-B Convertible Preferred Stock are
collectively referred to herein as the "Series 1 Preferred" and the Series 1
Preferred owned at the Effective Time is referred to herein as the "Shares," and
together with the Company Common Stock, "Company Stock";
WHEREAS, at the Effective Time the parties hereto will hold
Shares as set forth on Schedule 1 hereto;
WHEREAS, at the Effective Time, each of the Key Senior
Executives will hold Company Stock as set forth on Schedule 2 hereto (such
shares, along with any shares of
Company Stock or other equity securities of the Company that such Key Senior
Executive may subsequently acquire, referred to collectively as "Executive
Shares");
WHEREAS, the parties hereto desire to enter into this
Agreement to govern certain of their rights, duties and obligations after
consummation of the transactions contemplated by the Merger Agreement; and
WHEREAS, this Agreement shall be effective as of the Effective
Time.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Defined Terms.
(a) The following defined terms, when used in this Agreement,
have the respective meanings set forth below (such definitions to be equally
applicable to both singular and plural forms of the terms defined):
"Affiliate", when used with respect to any Person, means (i)
if such Person is a corporation, any officer or director thereof (other
than a director elected pursuant to Section 4(c) of the Series 1
Certificate of Designations) and any Person which is, directly or
indirectly, the beneficial owner (by itself or as part of any group) of
more than five percent (5%) of any class of any equity security (within
the meaning of the Securities Exchange Act) thereof, and, if such
beneficial owner is a partnership, any general partner thereof, or if
such beneficial owner is a corporation, any Person controlling,
controlled by or under common control with such beneficial owner, or
any officer or director of such beneficial owner or of any corporation
occupying any such control relationship, (ii) if such Person is a
partnership, any general or limited partner thereof, and (iii) any
other Person which, directly or indirectly, controls or is controlled
by or is under common control with such Person. For purposes of this
definition, "control" (including the correlative terms "controlling",
"controlled by" and "under common control with"), with respect to any
Person, shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by
contract or otherwise. The holding of Shares (or of Conversion Shares
obtained upon conversion of Shares) and the rights under the Series D
Purchase Agreement, the Series 1 Certificate of Designations, this
Stockholders' Agreement or the Amended and Restated Registration Rights
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Agreement (or the exercise of any such rights, including, without
limitation, nominating a director to the Board of the Company), shall
not cause an Investor to be deemed an "Affiliate" of the Company.
"Agreement" means this Stockholders' Agreement (together with
exhibits and schedules) as from time to time assigned, supplemented or
amended or as the terms hereof may be waived. This Agreement shall
supersede the Series D Stockholders' Agreement in accordance with
Section 9.2 hereto.
"Amended and Restated Registration Rights Agreement" means the
Registration Rights Agreement, dated as of _________________, among the
Series 1 Stockholders, as the same may be amended, modified or
supplemented from time to time, which supersedes the Registration
Rights Agreement in accordance with Section 9.2 hereto.
"Board" or "Board of Directors" means with respect to any
Person which is a corporation, a business trust or other entity, the
board of directors or other group, however, designated, which is
charged with legal responsibility for the management of such Person, or
any committee of such board of directors or group, however designated,
which is authorized to exercise the power of such board or group in
respect of the matter in question.
"Business Day" means any day other than a Saturday, Sunday or
any day on which banks in the location of the office of the Company
provided for in Section 9.13 hereof are authorized or obligated to
close.
"Capitalized Leases" means any lease to which the Company is
party as lessee, or by which it is bound, under which it leases any
property (real, personal or mixed) from any lessor other than the
Company, and which either is required to be capitalized in accordance
with generally accepted accounting principles consistently applied, or,
even if not so required to be capitalized, shall have (or have had), at
the time first entered into, an initial term of greater than three (3)
years (including leases of shorter duration which are or were
extendible to a total term greater than three (3) years at the option
of the lessor). The value of Capitalized Leases, as of the time of any
determination thereof, shall mean the sum of the then present values,
determined as hereinafter provided, of future obligations of lessees
under then existing Capitalized Leases. To compute the value of any
Capitalized Lease, the following methods shall be used, as applicable:
(a) values of leases required to be capitalized in
accordance with generally accepted accounting
principles shall be computed in accordance with such
principles; and
(b) values of other leases (and values of contracts or
other items which this Agreement provides are to be
valued as if they were Capitalized Leases)
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shall be computed by discounting, to the date of
determination, at an assumed interest rate of eight
percent (8%) per annum, the minimum amount of future
rental payments that will be due under the related
documentation, including rental payments that may be
due during extensions which are at the other party's
option, but excluding any amounts in respect of
insurance on, taxes on and/or maintenance of the
properties subject to such leases (provided that such
amounts are owed and paid only to the extent actually
incurred).
"Commission" means the Securities and Exchange Commission and
any other similar or successor agency of the federal government
administering the Securities Act or the Securities Exchange Act.
"Common Stock" means the Company's Common Stock, par value
$.01 per share, and shall also include any common stock of the Company
hereafter authorized and any capital stock of the Company of any other
class hereafter authorized which is not preferred as to dividends or
assets over any other class of capital stock of the Company or which
has ordinary voting power for the election of directors of the Company;
provided that Common Stock shall not include the Series 1 Preferred.
"Consolidated" or "consolidated", when used with reference to
any financial term in this Agreement, means the aggregate for the
Company of the amounts signified by such term for all such Persons,
with intercompany items eliminated, and, with respect to net worth,
after eliminating the portion of net worth properly attributable to
minority interests, if any, in the capital of any such Person (other
than in the capital of the Company) and otherwise as determined in
accordance with generally accepted accounting principles consistently
applied (except as otherwise expressly provided herein).
"Conversion Share" or "Conversion Shares" means the shares of
the Company's Common Stock obtained or obtainable upon conversion of
Shares and shall also include any capital stock or other securities
into which Conversion Shares are changed and any capital stock or other
securities resulting from or comprising a reclassification, combination
or subdivision of, or a stock dividend on, any Conversion Shares. In
the event that any Conversion Shares are disposed of or transferred
either in a public offering pursuant to a registration statement under
the Securities Act or pursuant to a Rule 144 Transaction, then the
transferees of such Conversion Shares shall not be entitled to any
benefits under this Agreement with respect to such Conversion Shares
and such Conversion Shares shall no longer be considered to be
"Conversion Shares" for purposes of any consent or waiver provision of
this Agreement.
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"Director Holder" shall have the meaning given it in the
Series 1 Certificate of Designation.
"Effective Time" shall have the same meaning herein as set
forth in the Merger Agreement.
"Environmental Laws" means all federal, state, local, foreign,
civil and criminal laws, statutes, ordinances, orders, codes,
Environmental Permits, rules, policies, and regulations and common law
relating to the protection of the environment and human health or
relating to the handling, use, generation, treatment, storage,
transportation or disposal of Hazardous Materials, including but not
limited to the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss. 6901 et seq.; the Toxic Substances Control Act, 15 U.S.C.
ss. 2601 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq.; the
Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801 et seq.; The Occupational Safety
and Health Act, 29 U.S.C. ss. 651; the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. ss. 136y et seq.; and the Oil Pollution
Act of 1990, 33 U.S.C. ss. 2701 et seq., all as may be amended or
superseded from time to time.
"Environmental Lien" means Liens arising under or pursuant to
any Environmental Law.
"Environmental Permits" means all permits, licenses,
approvals, authorizations or consents required by any Governmental
Authority under any applicable Environmental Law and includes any and
all orders, consent orders or binding agreements issued or entered into
by a Governmental Authority under any applicable Environmental Law.
"ERISA" means Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means each "person" (as defined in Section
3(9) of ERISA) which is under "common control" with the Company (within
the meaning of Section 414(b), (c), (m) or (o) of the Code).
"Xxxxxxx Holders" means (I) the Xxxxxxx Funds and (II) any
Affiliate, officer or employee of an Affiliate or investment fund
managed by an Affiliate of the Xxxxxxx Funds to which the Xxxxxxx Funds
may transfer record and/or beneficial ownership of the Shares or the
Conversion Shares. The transferor and the transferee shall notify the
Company in writing as to the transferee's status as a Xxxxxxx Holder in
accordance with this definition, and shall notify the Company if such
transferee ceases to be a Xxxxxxx Holder.
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"GAAP" means U.S. generally accepted accounting principles,
consistently applied.
"Governmental Authority" means any federal, state, or local
governmental agency or authority (including regulatory authority)
having jurisdiction over the Company or any of its respective assets or
businesses.
"Guaranty" means (i) any guaranty or endorsement of the
payment or performance of, or any contingent obligation in respect of,
any indebtedness or other obligation of any other Person, (ii) any
other arrangement whereby credit is extended to one obligor (directly
or indirectly) on the basis of any promise or undertaking of another
Person (a) to pay the indebtedness of such obligor, (b) to purchase an
obligation owed by such obligor, (c) to purchase or lease assets (or to
provide funds, goods or services) under circumstances that would enable
such obligor to discharge one or more of its obligations or (d) to
maintain the capital, working capital, solvency or general financial
condition of such obligor, in each case whether or not such arrangement
is disclosed in the balance sheet of such other Person or is referred
to in a footnote thereto and (iii) any liability as a general partner
of a partnership in respect of indebtedness or other obligations of
such partnership; provided, however, that the term "Guaranty" shall not
include (1) endorsements for collection or deposit in the ordinary
course of business, (2) any guaranty of indebtedness of the Company by
a subsidiary of the Company or (3) obligations of the Company which
would constitute Guaranties solely by virtue of the continuing
liability of a Person which has sold assets subject to liabilities for
the liabilities which were assumed by the Person acquiring the assets,
unless such liability is required to be carried on the consolidated
balance sheet of the Company. The amount of any Guaranty and the amount
of indebtedness resulting from such Guaranty shall be the maximum
amount of the guarantor's potential obligation in respect of such
Guaranty.
"Hazardous Materials" means any petroleum, petroleum
hydrocarbons, petroleum waste or petroleum products, underground
storage tanks, asbestos or asbestos-containing materials, pesticides,
lead and lead-containing materials, urea formaldehyde insulation and
polychlorinated biphenyls (PCBs), ionizing and non-ionizing radiation
including radon and electromagnetic frequency radiation; and any
chemicals, materials, substances or wastes in any amount or
concentration which are now or hereafter "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants" or words of similar import, under any applicable
Environmental Law.
"Impax Holders" means (i) the Impax Stockholders and (ii) any
Affiliate, officer or employee of an Affiliate or investment fund
managed by an Affiliate of the Impax Stockholders to which the Impax
Stockholders may transfer record and/or beneficial ownership of any
shares of the Shares or the Conversion Shares. The transferor and the
transferee shall notify the Company in writing as to the transferee's
status as an Impax
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Holder in accordance with this definition, and shall notify the Company
if such transferee ceases to be an Impax Holder.
"Indebtedness" of any Person means, without duplication, as of
any date as of which the amount thereof is to be determined, (i) all
obligations of such Person to repay money borrowed (including, without
limitation, all notes payable and drafts accepted representing
extensions of credit, all obligations under letters of credit, all
obligations evidenced by bonds, debentures, notes or other similar
instruments and all obligations upon which interest charges are
customarily paid), (ii) all Capitalized Leases in respect of which such
Person is liable as lessee or as the guarantor of the lessee, (iii) all
monetary obligations which are secured by any Lien existing on property
owned by such Person whether or not the obligations secured thereby
have been incurred or assumed by such Person, (iv) all conditional
sales contracts and similar title retention debt instruments under
which such Person is obligated to make payments, (v) all Guarantees by
such Person and (vi) all contractual obligations (whether absolute or
contingent) of such Person to repurchase goods sold and distributed.
"Indebtedness" shall not include, however, any unfunded obligations in
any employee pension benefit plan (as defined in ERISA) of the Company.
"Investment" means, with respect to any Person, (i) any loan,
advance or extension of credit by such Person to, and any contributions
to the capital of, any other Person, (ii) any Guaranty by such Person,
(iii) any interest in any capital stock, equity interest or other
securities of any other Person, other than joint venturers, partnering
entities or other entities with which the Company has a business
relationship or a strategic reliance, up to an aggregate of $1,000,000,
(iv) any transfer or sale of property of such Person to any other
Person other than upon full payment, in cash or other consideration, of
not less than the agreed sale price bargained on an arms-length basis
and (v) any commitment or option to make an Investment if, in the case
of an option, the consideration therefor exceeds $10,000, and any of
the foregoing under clauses (i) through (v) shall be considered an
Investment whether such Investment is acquired by purchase, exchange,
merger or any other method; provided, that the term "Investment" (1)
shall not include an Investment in the Company, (2) shall not include
current trade and customer accounts receivable and allowances, provided
they relate to goods furnished in the ordinary course of business and
are given in accordance with the customary practices of the Company,
(3) shall not include temporary investments of excess cash of the
Company in any of the following: (A) investment grade obligations
maturing within one year of their issuance which as to principal and
interest constitute direct obligations of, or obligations guaranteed
by, the United States of America, (B) negotiable certificates of
deposit of banks or trust companies which are organized under the laws
of the United States of America or any state thereof and which have
capital and surplus of at least $500,000,000, (C) commercial paper
which is rated not less than prime-one or A-1 or their equivalents by
Xxxxx'x Investor Service, Inc. or Standard & Poor's Corporation or
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their successors, (D) any repurchase agreement secured by any one or
more of the foregoing and (E) money market funds primarily investing in
any of the foregoing securities and sponsored by or affiliated with
nationally recognized brokerage or investment advisory firms, and (4)
shall not include Investments of the Company existing immediately after
the Effective Time and disclosed on Schedule 3 hereto.
"Joinder Agreement" means a Joinder Agreement substantially in
the form attached hereto as Exhibit A.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, or preference, priority or other
security interest of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same effect as any of the
foregoing, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against the
assignor), any filing of a financing statement as debtor under the
Uniform Commercial Code or any similar statute and any agreement to
give or make any of the foregoing; provided that the term "Lien" shall
not include Permitted Liens.
"Outside Directors" means those directors on the Company's
Board of Directors at any time who are not otherwise Affiliates of or
employed by the Company.
"Outstanding" or "outstanding" means (a) when used with
reference to the Shares or the Conversion Shares as of a particular
time, all Shares or Conversion Shares theretofore duly issued except
(i) Shares and Conversion Shares theretofore reported as lost, stolen,
mutilated or destroyed or surrendered for transfer, exchange or
replacement, in respect of which new or replacement Shares and
Conversion Shares have been issued by the Company, (ii) Shares and
Conversion Shares theretofore cancelled by the Company and (iii) Shares
and Conversion Shares registered in the name of, as well as Shares and
Conversion Shares owned beneficially by, the Company, or any of its
Affiliates. For purposes of the preceding sentence, in no event shall
"Affiliates" include (x) the persons which are identified as "Series 1
Stockholders" on Schedule 1 hereto or (y) any Affiliates of any such
persons.
"Pension Plan" means any "employee pension benefit plan" as
defined in Section 3(2) of ERISA.
"Permitted Lien" means (i) any Lien for Taxes, governmental
charges or levies not yet due or delinquent or being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, (ii) any imperfections of title,
easements, rights of way or similar Liens, zoning laws or land use
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restrictions as normally exist with respect to property similar in
character to the property affected thereby and which individually or in
the aggregate with other such Liens, zoning laws or land use
restrictions do not materially impair the value or marketability of the
property subject to such Liens, zoning laws or land use restrictions or
interfere with the use of such property in the conduct of the business
of the Company and which do not secure obligations for money borrowed,
(iii) Liens imposed by any law, such as mechanic's, materialman's,
landlord's, warehouseman's and carrier's Liens, securing obligations
incurred in the ordinary course of business which are not yet overdue
or which are being diligently contested in good faith by appropriate
proceedings and, with respect to such obligations which are being
contested, for which the Company has set aside adequate reserves, if
appropriate, and (iv) any Lien resulting from purchase by the Company
of goods in the ordinary course of business as to which Liens are not
filed of record.
"Person" or "person" means an individual, corporation,
partnership, firm, association, joint venture, trust, unincorporated
organization, government, governmental body, agency, political
subdivision or other entity.
"Preferred Director" shall have the meaning given it in the
Series 1 Certificate of Designation.
"Preferred Stock" means any class of the capital stock of a
corporation (whether or not convertible into any other class of such
capital stock) which has any right, whether absolute or contingent, to
receive dividends or other distributions of the assets of such
corporation (including, without limitation, amounts payable in the
event of the voluntary or involuntary liquidation, dissolution or
winding-up of such corporation), which right is superior to the rights
of another class of the capital stock of such corporation. "Preferred
Stock" includes, without limitation, the Series 1 Preferred.
"Registrable Securities" means (i) any shares of Common Stock
issued or issuable upon conversion of the Series 1 Preferred or
exercise of the Warrants purchased by the Xxxxxxx Funds pursuant to the
Series D Purchase Agreements and (ii) any securities issued or issuable
with respect to the Common Stock referred to in clause (i) by way of
stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization
or otherwise. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when they have (x)
been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (y) been
transferred pursuant to a Rule 144 Transaction (or any similar rule
then in force) under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated March 2, 1999, among Global and the Xxxxxxx Funds,
which shall be superseded by the
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Amended and Restated Registration Rights Agreement, in accordance with
Section 9.2 hereto.
"Restricted Payment" means (i) every payment in connection
with the redemption, purchase, retirement or other acquisition by or on
behalf of the Company of any shares of the Company's capital stock (as
defined below), whether or not owned by the Company, (ii) any
prepayments or repayments made on Indebtedness of the Company, (iii)
every payment to or on behalf of any Affiliate of the Company on
account of or with respect to any lease arrangements, and (iv) every
payment by or on behalf of the Company (whether as repayment or
prepayment of principal or as interest or otherwise) on or with respect
to (A) any obligation to repay money borrowed owing to any Affiliate of
the Company or (B) any obligation, to any Person, of any Affiliate of
the Company or to any other holder of shares of the Company's capital
stock (as defined below), which obligation is assumed, or is the
subject of a Guaranty, by the Company; provided, however, (a) that the
restrictions of the foregoing clause (i) shall not apply to (A) any
payment in respect of capital stock of the Company to the extent
payable in shares of the capital stock of the Company, (B) any
redemption of the Series 1 Preferred or (C) any redemption or
repurchase pursuant to the 1995 Stock Incentive Plan as in effect on
the date hereof, or other similar equity plan to be adopted by the
Company, (b) that the restrictions of the foregoing clause (ii) shall
not apply to any regularly scheduled prepayment or repayment of
Indebtedness, provided that such Indebtedness being prepaid or repaid
is not at the time of such prepayment or repayment or at any prior time
thereto owing to an Affiliate of the Company, and (c) that none of the
foregoing clauses shall apply to any payments, distributions or other
transfers or actions on or with respect to the Shares or the Conversion
Shares or to the Investors (or holders of Shares or the Conversion
Shares) under this Agreement. For purposes of this definition, "capital
stock" shall also include warrants and other rights and options to
acquire shares of capital stock (whether upon exercise, conversion,
exchange or otherwise).
"Rule 144" means (i) Rule 144 under the Securities Act as such
Rule is in effect from time to time and (ii) any successor rule,
regulation or law, as in effect from time to time.
"Rule 144A" means (i) Rule 144A under the Securities Act as
such Rule is in effect from time to time and (ii) any successor rule,
regulation or law, as in effect from time to time.
"Rule 144 Transaction" means a transfer of Conversion Shares
(A) complying with Rule 144 as such Rule is in effect on the date of
such transfer (but not including a sale other than pursuant to
"brokers' transactions" as defined in clauses (1) and (2) of paragraph
(g) of such Rule as in effect on the date hereof) and (B) occurring at
a time when Conversion Shares are registered pursuant to Section 12 of
the Securities Exchange Act.
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"Securities Act" means the Securities Act of 1933, as amended,
and the rules, regulations and interpretations thereunder.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules, regulations and interpretations
thereunder.
"Series 1 Certificate of Designations" means the Certificate
of Designations of Series 1-A Convertible Preferred Stock and Series
1-B Convertible Preferred Stock (as the same may be amended from time
to time), in the form attached hereto as Exhibit B.
"Series 1 Holder" means the Xxxxxxx Holders and the Impax
Holders.
"Series D Purchase Agreements" means, collectively, the
separate Stock and Warrant Purchase Agreements, dated as of March 2,
1999 (as amended by Amendment No. 1, dated as of May 18, 1999), between
Global and each of the Xxxxxxx Funds.
"Series D Stockholders' Agreement" means the Stockholders'
Agreement, dated March 2, 1999, among Global, Xxxxxxx and the Xxxxxxx
Funds, which is superseded by this Stockholders' Agreement.
"Shares" has the meaning set forth in the recitals hereto. In
the event that any Shares are sold either in a public offering pursuant
to a registration statement under Section 5 of the Securities Act or
pursuant to a Rule 144 Transaction, then the transferees of such Shares
shall not be entitled to any benefits under this Agreement with respect
to such Shares and such Shares shall no longer be considered to be
"Shares" for purposes of any consent or waiver provision of this
Agreement.
"Tax" or "Taxes" means all federal, state, local or foreign
net or gross income, gross receipts, net proceeds, sales, use, ad
valorem, value added, franchise, bank shares, withholding, payroll,
employment, excise, property, alternative or add-on minimum,
environmental or other taxes, assessments, duties, fees, levies or
other governmental charges of any nature whatsoever, whether disputed
or not, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
"Tax Returns" means any returns, reports or statements
(including any information returns) required to be filed for purposes
of a particular Tax.
"Taxing Authority" means any governmental agency, board,
bureau, body, department or authority of any United States federal,
state or local jurisdiction, or any foreign jurisdiction, having or
purporting to exercise jurisdiction with respect to any Tax.
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"Transfer" means, with respect to any security, any direct or
indirect sale, transfer, assignment, hypothecation, pledge or any other
disposition of such security or any interest therein.
"Transferee" shall mean any transferee (except for a Series 1
Holder) of Shares or Conversion Shares from a Series 1 Holder.
Transferees shall not include a transferee of Shares or Conversion
Shares disposed of or transferred in either a public offering pursuant
to a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or pursuant to Rule 144 under the
Securities Act.
(b) Unless otherwise provided herein, all accounting terms
used in this Agreement shall be interpreted in accordance with GAAP as in effect
from time to time, applied on a consistent basis.
(c) The following terms, when used in this Agreement, shall
have the meanings defined for such terms in the Section set forth below (such
definitions to be equally applicable to both singular and plural forms of the
terms defined):
Term Section
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Acceptance Notice 3.1(a)
Buyer 3.1(a)
Company Recitals
Company Common Stock Recitals
Xxxxxxx Preamble
Executive Shares Recitals
Xxxxxxx Funds Preamble
Xxxxxxx Series D Transaction Documents 9.2
Global Preamble
Hsiao Preamble
Xxx Preamble
Impax Recitals
Impax Stockholders Preamble
Inclusion Notice 3.1(a)
Inclusion Offer 3.1(a)
Investor Preamble
Investor Group Preamble
Key Senior Executives Preamble
Merger Recitals
Merger Agreement Recitals
Merger Representations 7.1
Series 1 Preferred Recitals
Series 1 Stockholders Preamble
Shelf Registration 5.8
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Subsequent Shelf Registration 5.8
Surviving Corporation Recitals
Transferor Shares 3.1(a)
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES
2.1 Transfer Restrictions Generally; Securities Act. Except as
provided pursuant to Article III herein, each Investor agrees that it will not
sell or otherwise dispose of any Shares or Conversion Shares, unless such Shares
or Conversion Shares have been registered under the Securities Act and, to the
extent required, under any applicable state securities laws, or pursuant to an
applicable exemption from such registration requirements.
2.2 Legends. (a) The Company may endorse on all Series 1
Preferred share certificates the following legends and such other legends as may
be required by applicable state securities laws; provided, that no such legend
shall be endorsed on any Share certificates which, when issued, are no longer
subject to the restrictions of this Article II.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS CONTAINED IN A STOCKHOLDERS' AGREEMENT, DATED AS OF
______, 1999, AS SUCH AGREEMENT MAY BE AMENDED, MODIFIED OR RESTATED
FROM TIME TO TIME (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
ISSUER HEREOF AND WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE
HOLDER HEREOF UPON WRITTEN REQUEST)."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS OR (ii) AN APPLICABLE EXEMPTION FROM REGISTRATION
THEREUNDER OR UNDER APPLICABLE STATE SECURITIES LAWS."
(b) The certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except a new certificate
issued upon the completion of a Transfer pursuant to a registered public
offering under the Securities Act and made in accordance with the Securities
Act) shall also bear such legends, unless in the opinion of counsel for the
Company, the Registrable Securities or Shares represented thereby are no longer
subject to the provisions of this Agreement or, in the opinion of the Company
(with advice from counsel to the
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Company, as the Company may deem appropriate), the restrictions imposed under
the Securities Act or state securities laws, in which case the applicable legend
(or legends) may be removed.
2.3 Joinder Agreement.
Each Series 1 Stockholder agrees to cause, upon any Transfer
of Shares or Conversion Shares, in accordance with the terms of this Agreement,
each Person who receives such Shares or Conversion Shares, to execute a Joinder
Agreement and thereby become a party to this Agreement.
ARTICLE III
RIGHTS OF INCLUSION
3.1 Rights of Inclusion (Management Tag-Along) (a) In the
event a Key Senior Executive proposes to Transfer any Executive Shares (the
"Transferor Shares") to any Person (the "Buyer"), as a condition to such
Transfer, such Key Senior Executive shall cause the Buyer to offer (the
"Inclusion Offer") to purchase from each Investor, at each such Investor's
option, up to that number of Investor Shares determined in accordance with
Section 3.2 on the same terms and conditions as are applicable to the Transferor
Shares (including any consideration to be received by such Key Senior Executive
in the form of bonuses, consulting fees, noncompetition payments, pursuant to
employment arrangements or similar arrangements), except that each Investor
shall not be required to provide any representation, warranty or other
undertaking other than with respect to its ownership of, and authority to
Transfer, the Investor Shares owned by it free of any liens or encumbrances.
Such Key Senior Executive shall provide prompt written notice to each Investor
(the "Inclusion Notice") setting forth all the terms and conditions of the
Inclusion Offer, and each Investor may accept the Inclusion Offer in whole or in
part by providing a written notice of acceptance with respect to Investor Shares
owned by it to such Key Senior Executive within twenty (20) days of delivery of
the Inclusion Notice to it (the "Acceptance Notice").
(b) Each Investor shall have the right to sell, pursuant to
the Inclusion Offer, Investor Shares representing the same percentage of all
Investor Shares owned by it as the Transferor Shares are of all Executive Shares
owned by such Key Senior Executive (such percentage shall be calculated on the
basis that all Shares owned by each Investor have been converted into shares of
Common Stock at the current conversion price per share under Section 5 of the
Series 1 Certificate of Designations); provided, however, that if no Investor
elects to exercise such right, such Key Senior Executive shall nonetheless be
entitled to Transfer all or any portion of the Transferor Shares described in
the Inclusion Notice. In the event the number of Investor Shares for which the
Investor elects to exercise such right, along with the Transferor Shares and any
other shares of the Company to be sold by other stockholders pursuant to any
similar rights granted to such other stockholders, exceed the number of shares
which the Buyer is willing to purchase, the number of shares to be Transferred
to the Buyer by each transferor shall
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be reduced so that each transferor is entitled to Transfer the same percentage
of its shares included in its Acceptance Notice as each other transferor. If an
Investor elects to exercise such right, such Investor may, in its sole
discretion, determine the composition of the Investor Shares (i.e., the number
of the Shares and Company Common Stock to be included in the Investor Shares) to
be Transferred by it to the Buyer pursuant to the Inclusion Offer. In the event
that any Investor chooses to include any Shares in the Investor Shares to be
Transferred by it to the Buyer pursuant to the Inclusion Offer, any such
Investor shall, prior to or simultaneously with such Transfer, convert such
Shares into Company Common Stock so that each Investor Transfers only Company
Common Stock to the Buyer.
3.2 Procedure. (a) Such Key Senior Executive shall have ninety
(90) days, commencing on the date of the Inclusion Notice, in which to Transfer,
on behalf of himself and the Investor Group up to the number of shares covered
by the Inclusion Offer (including the Transferor Shares) to the Buyer. The terms
of such Transfer, including, without limitation, price and form of
consideration, shall be as set forth in the Inclusion Notice. If at the end of
such ninety (90) day period such Key Senior Executive has not completed the
Transfer of the Transferor Shares and the Investor Shares (if any) proposed to
be Transferred, such Key Senior Executive may not proceed with such Transfer or
any other Transfer without first giving a new Inclusion Notice pursuant to the
provisions of this Article III.
(b) If such Key Senior Executive is able to complete the
Transfer of the Transferor Shares and the Investor Shares (if any) proposed to
be Transferred within such ninety (90) day period, at the closing thereof, each
Investor shall deliver to the Buyer a certificate or certificates representing
the Investor Shares owned by it to be Transferred pursuant to the Inclusion
Offer, free and clear of all liens and encumbrances, and the Buyer shall pay to
each such Investor the purchase price for the Investor Shares so Transferred
pursuant to this Article III and shall furnish such other evidence of the
completion of such Transfer and the terms thereof as may be reasonably requested
by the Investor Group.
3.3 Exceptions. (a) The provisions of this Article III shall
not apply to any Transfer or proposed Transfer by a Key Senior Executive of
Executive Shares which represents twelve and one-half percent (12.5%) or less of
the Executive Shares held by such Key Senior Executive at the Effective Time if
such Transfer or proposed Transfer by such Key Senior Executive of Executive
Shares, together with all other Transfers by such Key Senior Executive of
Executive Shares on or in the three years prior to the date of such Transfer,
represent twenty-five percent (25%) or less of the Executive Shares held by such
Key Senior Executive at the Effective Time, with the Executive Shares held by
such Key Senior Executive at the Effective Time to be appropriately adjusted to
reflect any stock split, stock dividend, recapitalization or similar event;
provided, however, that each Transfer of such Executive Shares that takes place
within three years of any other Transfer to the same Person or any Affiliate of
such Person shall be aggregated for purposes of such twelve and one-half percent
(12.5%) threshold. In the event that such Key Senior Executive desires to
exercise an option to purchase Company Common Stock, then such Key Senior
Executive may Transfer Executive Shares to the extent necessary to obtain the
funds
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to exercise such option and such Transfer shall not be included in the
calculation of the percentages in this Section 3.3 or subject to the provisions
of this Article III; provided that such option must expire within ninety (90)
days of such Transfer.
(b) If a Key Senior Executive Transfers Executive Shares which
represents greater than twelve and one-half percent (12.5%) of the Executive
Shares held by such Key Senior Executive at the Effective Time or, together with
all other Transfers by such Key Senior Executive of such Executive Shares on or
within three years prior to the date of such Transfer, represents greater than
twenty-five (25%) of the Executive Shares held by such Key Senior Executive at
the Effective Time, then the provisions of this Article III shall only be
applicable to such Executive Shares held by the Key Senior Executive in excess
of such percentages.
(c) The provisions of this Article III shall not apply to any
Executive Shares the Key Senior Executive Transfers to any trust which is
established solely for the benefit of the spouse or any lineal ancestor or
descendant (including by adoption and stepchildren) of such Key Senior Executive
and whose terms are not inconsistent with the terms of this Agreement.
(d) The provisions of this Article III shall only apply to a
Key Senior Executive so long as such Key Senior Executive is an executive
officer of the Company at the time of any proposed Transfer.
ARTICLE IV
NEGATIVE COVENANTS OF THE COMPANY
So long as the Series 1 Holders hold any Shares (except as
otherwise provided in Section 4.2 herein), the Company covenants and agrees that
without the prior written consent of the holders of (A) at least 80% of
outstanding Shares with respect to Sections 4.1, 4.3 and 4.5 to 4.10 herein and
(B) at least 50% of the outstanding Shares with respect to Sections 4.2 and 4.4
herein:
4.1 No Dilution or Impairment; No Changes in Capital Stock.
The Company will not, by amendment of its certificate of incorporation or
through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Series 1
Certificate of Designations, the Amended and Restated Registration Rights
Agreement, this Agreement or the provisions of Series D Purchase Agreements that
survive pursuant to Section 9.2 herein. The Company will at all times in good
faith assist in the carrying out of all such terms, and in the taking of all
such action, as may be necessary or appropriate in order to protect the rights
of the holders of Shares (as such rights are set forth in the Series D Purchase
Agreements, the Series 1 Certificate of Designations, the Amended and Restated
Registration Rights Agreement and this Agreement) against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will not issue any shares or class or series of
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equity or equity-linked security, which is senior to, or pari passu with, the
Series 1 Preferred as to dividend payments or amounts payable in the event of
liquidation or winding up of the Company; except that the Company may issue up
to $10 million of preferred stock which is pari passu with the Series 1
Preferred, (b) will not enter into any agreement or instrument which would
restrict or otherwise materially adversely affect the ability of the Company to
perform its obligations under the Series D Purchase Agreements, this Agreement,
the Amended and Restated Registration Rights Agreement or the Series 1
Certificate of Designations, (c) will not amend its certificate of incorporation
or by-laws in any manner which would impair or reduce the rights of the
Preferred Stock, including, without limitation, an amendment which would alter
or change the powers, privileges or preferences of the holders of the Series 1
Preferred (including, without limitation, changing the Series 1 Certificate of
Designations after any Shares have been called for redemption), (d) except as
otherwise provided in the Series 1 Certificate of Designations, as in effect at
the Effective Time, will not redeem, repurchase or otherwise acquire any shares
of capital stock of the Company or any other rights or options to subscribe for
or purchase any capital stock of the Company or any other securities convertible
into or exchangeable for capital stock of the Company, (e) will not permit the
par value or the determined or stated value of any shares of Common Stock
receivable upon the conversion of the Shares to exceed the amount payable
therefor upon such conversion, (f) will take all such action as may be necessary
or appropriate in order that the Company may at all times validly and legally
issue duly authorized, fully paid and nonassessable shares of the Company Common
Stock free from all taxes, Liens and charges with respect to the issue thereof,
upon the conversion of the Shares from time to time outstanding, (g) will not
take any action which results in any adjustment of the current conversion price
under the Series 1 Certificate of Designations if the total number of shares of
the Common Stock (or other securities) issuable after the action upon the
conversion of all of the then outstanding Shares would exceed the total number
of shares of Common Stock (or other securities) then authorized by the Company's
certificate of incorporation and available for the purpose of issuance upon such
conversion or exercise, (h) will not have any authorized Common Stock (and will
not issue any Common Stock) other than its existing authorized Common Stock,
$.01 par value per share, and (i) will not amend its certificate of
incorporation to change any terms of its Common Stock.
4.2 Indebtedness. So long as the Series 1 Holders hold at
least 20% of the aggregate number of Shares owned at the Effective Time, the
Company will not (i) incur Indebtedness, excluding any Indebtedness set forth on
Schedule 4 hereto, in excess of $15 million in aggregate principal amount; or
(ii) enter into any agreement, amendment or modification with respect to any
Indebtedness, which agreement, amendment or modification under clause (ii)
restricts or prohibits (or was intended primarily to restrict or prohibit) the
Company from making any payments under, or otherwise performing under this
Stockholders' Agreement.
4.3 Dissolution. The Company will not (or will not agree to)
wind up, liquidate or dissolve its affairs.
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4.4 No Change in Business. The Company will not change
substantially the character of its business as conducted as of the date hereof
and as of the Effective Time; the Company is engaged primarily in the business
of manufacturing and distributing immediate release and controlled release solid
oral pharmaceutical products as well as providing product development services
to major pharmaceutical companies.
4.5 Restricted Payments; Investments. The Company will not
declare or make or permit to be declared or made:
(a) any Restricted Payment; or
(b) any Investment.
4.6 Affiliate Loans and Guaranties. The Company may not incur
or permit to exist any of the following:
(a) any obligation of the Company to repay money borrowed
owing to (i) any Affiliate of the Company or (ii) any other holder of shares of
the capital stock of the Company; or
(b) any obligation, to any Person, which obligation is assumed
or guaranteed by the Company and which is an obligation of (i) any Affiliate of
the Company, other than the obligation by the Company to indemnify the directors
and officers of the Company or of a wholly-owned subsidiary of the Company, or
(ii) any other holder of shares of the capital stock of the Company (excluding,
in the case of this clause (b), any obligation of the Company which is not owed
to an Affiliate of the Company or to an Affiliate or to any other holder of
shares of the capital stock of the Company).
This Section 4.6 shall not apply to (1) any surviving obligations under the
Series D Purchase Agreements or this Agreement or with respect to the Shares,
(2) any loans, advances or Guarantees referred to in clause (1) of the proviso
to the definition of "Investment" contained in Article I hereof or (3)
Indebtedness identified on Schedule 4 hereto.
4.7 Transactions with Affiliates. The Company will not,
directly or indirectly, enter into any transaction or agreement (including,
without limitation, the purchase, sale, distribution, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Company,
unless such transaction or agreement (a) is approved by a majority of the
Outside Directors on the Board of Directors, and (b) is on terms that are no
less favorable to the Company, as the case may be, than those which might be
obtained at the time of such transaction from a Person who is not such an
Affiliate; provided, however, that this Section 4.7 shall not limit, or be
applicable to, (i) employment arrangements with (and general salary and benefits
compensation for) any individual who is a full-time employee of the Company if
such arrangements are approved by a majority of the Outside Directors on the
Board of Directors; and
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(ii) the payment of reasonable and customary regular fees to directors of the
Company who are not employees of the Company; and (iii) existing arrangements as
disclosed on Schedule 5 hereto.
4.8 Liens. The Company will not create or permit to exist, to
create or suffer to exist, any Lien upon or with respect to any of its assets or
income, other than Permitted Liens and existing liens set forth on Schedule 6
hereto.
4.9 Private Placement Status. Neither the Company nor any
agent nor other Person acting on the Company's behalf will do or cause to be
done (or will omit to do or to cause to be done) any act which act (or which
omission) would result in bringing the issuance or sale of the Shares or the
Conversion Shares within the provisions of Section 5 of the Securities Act or
the filing, notification or reporting requirements of any state securities law
(other than in accordance with a registration and qualification of Conversion
Shares pursuant to the Amended and Restated Registration Rights Agreement).
4.10 Maintenance of Public Market. The Company will not
proceed with a program of acquisition of its Common Stock, initiate a corporate
reorganization or recapitalization or undertake a consolidation or merger or
authorize, consent to or take any action which would have the effect of:
(a) removing the Company from registration with the Commission
under the Securities Exchange Act with respect to the Company's Common Stock;
(b) requiring the Company to make a filing under Section 13(e)
of the Securities Exchange Act;
(c) reducing substantially or eliminating the public market
for shares of Common Stock of the Company;
(d) causing a delisting of the Company's Common Stock as a
Small Cap Market Security on the NASDAQ Stock Market (unless such stock is
delisted as a result of being listed on a national securities exchange); or
(e) if any shares of the Company's Common Stock are at any
time listed on a national exchange, causing a delisting of such stock from such
exchange.
4.11 Actions Prior to the Effective Time. From the date hereof
through the Effective Time, the Company will not, (a) issue or agree to issue
any capital stock or any securities exercisable for, or convertible or
exchangeable into, capital stock or (b) purchase, redeem or otherwise acquire
any of its capital stock; provided, however, that this Section 4.11 shall not
limit, or be applicable to, (i) the transactions contemplated by the Merger
Agreement and this Agreement, (ii) grants of options or issuances of Common
Stock to officers, directors or
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employees of the Company pursuant to the current terms of the Company's 1995
Stock Incentive Plan as in effect on the date hereof or other similar equity
plan to be adopted by the Company and (iii) the exercise of existing warrants.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
5.1 Maintenance of Existence, Properties and Franchises;
Compliance with Law; Taxes; Insurance. The Company will:
(a) maintain its corporate existence, rights and other
franchises in full force and effect;
(b) maintain its tangible assets in good repair, working order
and condition so far as necessary or advantageous to the proper carrying on of
its businesses;
(c) comply with all applicable laws and with all applicable
orders, rules, rulings, certificates, licenses, regulations, demands, judgments,
writs, injunctions and decrees, provided, that such compliance shall not be
necessary so long as (i) the applicability or validity of any such law, order,
rule, ruling, certificate, license, regulation, demand, judgment, writ,
injunction or decree shall be contested in good faith by appropriate proceedings
and (ii) failure to so comply will not have a material adverse effect on the
assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or prospects of the Company on a consolidated
basis;
(d) pay promptly when due all Taxes imposed upon its
properties, assets or income and all claims or indebtedness (including, without
limitation, vendor's, workmen's and like claims) which might become a lien upon
such properties or assets; provided, that payment of any such Tax shall not be
necessary so long as (i) the applicability or validity thereof shall be
contested in good faith by appropriate proceedings and a reserve, if
appropriate, shall have been established with respect thereto and (ii) failure
to make such payment will not have a material adverse effect on the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of the Company on a consolidated basis;
and
(e) keep adequately insured, by financially sound and
reputable insurers of nationally recognized stature, all its properties of a
character customarily insured by entities similarly situated, against loss or
damage of the kinds and in amounts customarily insured against by such entities
and with such deductibles or coinsurance as is customary.
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5.2 Office for Payment, Exchange and Registration; Location of
Office; Notice of Change of Name or Office.
(a) So long as any of the Shares is outstanding, the Company
will maintain an office or agency where Shares may be presented for redemption,
exchange, conversion, exercise or registration of transfer as provided in this
Agreement. Such office or agency initially shall be the office of the Company
specified in Section 9.13 hereof, subject to Section 5.2(b).
(b) The Company shall give each holder of Shares at least
twenty (20) days' prior written notice of any change in (i) the name of the
Company as then in effect or (ii) the location of the office of the Company
required to be maintained under this Section 5.2.
5.3 Fiscal Year. The fiscal year of the Company for tax,
accounting and any other purposes shall end on December 31 of each calendar
year.
5.4 Environmental Matters.
(a) The Company shall keep and maintain any property either
owned leased, operated or occupied by the Company free and clear of any
Environmental Liens, and the Company shall keep all such property free of
Hazardous Material contamination and in compliance with all applicable
Environmental Laws and the terms and conditions of any Environmental Permits;
provided, however, that the Company shall have the right at its cost and
expense, and acting in good faith, to contest, object or appeal by appropriate
legal proceeding the validity of any Environmental Lien. The contest, objection
or appeal with respect to the validity of an Environmental Lien shall suspend
the Company's obligation to eliminate such Environmental Lien under this
paragraph pending a final determination by appropriate administrative or
judicial authority of the legality, enforceability or status of such
Environmental Lien, provided that the following conditions are satisfied: (i)
contemporaneously with the commencement of such proceedings, the Company shall
give written notice thereof to each holder of Shares or Conversion Shares; and
(ii) if under applicable law any real property or improvements thereon are
subject to sale or forfeiture for failure to satisfy the Environmental Lien
prior to a final determination of the legal proceedings, the Company must
successfully move to stay such sale, forfeiture or foreclosure pending final
determination of the Company's action; and (iii) the Company must, if requested,
furnish to the holders of Shares or Conversion Shares, a good and sufficient
bond, surety, letter of credit or other security satisfactory to such holders
equal to the amount (including any interest and penalty) secured by the
Environmental Lien.
(b) The Company will, by administrative or judicial process,
enforce the obligations of any other Person who is potentially liable for
damages, contribution or other relief in connection with any violation of
Environmental Laws, including, but not limited to, asbestos abatement, Hazardous
Material remediation or off-site or on-site disposal.
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(c) The Company will defend, indemnify and hold harmless each
current, former and future holder of Shares or Conversion Shares, its employees,
officers, directors, stockholders, partners, financial and legal representatives
and assigns, from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits and claims, joint or several, and any
costs, disbursements and expenses (including attorneys' fees and expenses and
costs of investigation) of whatever kind or nature, known or unknown, contingent
or otherwise asserted against, imposed on, or sustained by, them, arising out of
or in any way related to (i) the presence, disposal, release, removal,
discharge, storage or transportation by the Company on behalf of any
predecessors thereof of any Hazardous Material upon, into, from or affecting any
real property (including improvements) currently or formerly owned, leased,
operated or occupied by the Company; (ii) any judicial or administrative action,
suit or proceeding, actual or threatened, relating to Hazardous Material upon,
in, from or affecting any real property (including improvements) currently or
formerly owned, leased, operated or occupied by the Company for which the
Company could be liable; (iii) any violation of any Environmental Law, by the
Company or any of their agents, tenants, subtenants or invitees; (iv) the
imposition of any Environmental Lien for the recovery of costs expended in the
investigation, study or remediation of any environmental liability of (or
asserted against) the Company; and (v) any liability arising out of or related
to the off-site shipment, disposal, treatment, handling or disposal of Hazardous
Materials. This Section 5.4(c) and Section 5.4(d) shall survive any payment,
conversion or transfer of Shares and any termination of this Agreement.
(d) To the extent that the Company is strictly liable without
regard to fault under any environmental law, regulation or ordinance, the
Company's obligations to the holders of Shares or Conversion Shares under any of
the indemnification provisions of the Series D Purchase Agreements shall
likewise be strict without regard to fault with respect to the violation of any
environmental law, regulation or ordinance which results in any liability to any
of the indemnified persons referred to in Section 5.4(c).
5.5 Reservation of Shares. There have been reserved, and the
Company shall at all times keep reserved, free from preemptive rights, out of
its authorized Common Stock a number of shares of Common Stock sufficient to
provide for the exercise of the conversion rights provided in Section 5 of the
Series 1 Certificate of Designations.
5.6 Securities Exchange Act Registration.
(a) In accordance with and subject to the provisions of the
Amended and Restated Registration Rights Agreement in the form attached hereto
as Exhibit C, which the Company, the Flemings Funds and the Impax Stockholders
shall execute simultaneously herewith, the Company, the Flemings Funds and the
Impax Stockholders will maintain effective a registration statement (containing
such information and documents as the Commission shall specify and otherwise
complying with the Securities Exchange Act), under Section 12(b) or Section
12(g), whichever is applicable, of the Securities Exchange Act, with respect to
the Company Common Stock, and the Company will file on time such information,
documents and
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reports as the Commission may require or prescribe for companies whose stock has
been registered pursuant to such Section 12(b) or Section 12(g), whichever is
applicable.
(b) The Company will, upon the request of any holder of
Shares, make whatever other filings with the Commission, or otherwise make
generally available to the public such financial and other information, as any
such holder may deem reasonably necessary or desirable in order to enable such
holder to be permitted to sell Shares pursuant to the provisions of Rule 144.
5.7 Delivery of Information for Rule 144A Transactions. If a
holder of Shares proposes to transfer any such Shares pursuant to Rule 144A
under the Securities Act (as in effect from time to time), the Company agrees to
provide (upon the request of such holder or the prospective transferee) to such
holder and (if requested) to the prospective transferee any financial or other
information concerning the Company which is required to be delivered by such
holder to any transferee of such Shares pursuant to such Rule 144A, subject to
confidentiality provisions, if applicable.
5.8 Shelf Registration. On June 29, 1999, the Company filed
with the SEC a registration statement on Form S-3 for an offering to be made on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act (a
"Shelf Registration") registering the resale from time to time by the Investors
of all the Registrable Securities held by such Investors at such time (the
"Initial Shelf Registration"). Promptly following the Effective Time, the
Company shall undertake to file with the SEC a registration statement on Form
S-3 registering for resale from time to time by the Investors of Registrable
Securities not already registered pursuant to the Initial Shelf Registration. If
the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be
effective for any reason at any time, the Company shall use its best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within thirty (30) days of such cessation of
effectiveness amend the Shelf Registration in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof, or to
promptly file an additional Shelf Registration covering all the Registrable
Securities (a "Subsequent Shelf Registration"). All fees and expenses incident
to the Company's or the Investor Group's performance of or compliance with a
Shelf Registration pursuant to this Agreement shall be borne by the Company
whether or not any of the Registration Statements become effective. At such time
that all holders in the Investor Group are able to sell their common stock under
Rule 144 without any restrictions, then the obligation of the Company to
maintain the Shelf Registration pursuant to this Section 5.8 shall terminate.
5.9 Further Assurances. The Company will from time to time,
upon the request of the Series 1 Holders, promptly and duly execute and deliver
any and all such further instruments and documents as the Series 1 Holders may
reasonably deem necessary or desirable to obtain the full benefits of (i) the
obligations under this Agreement and (ii) the other rights and powers herein
granted. Upon the instructions from time to time of (I) the Xxxxxxx Funds, (II)
the Impax Stockholders or (III) any Transferee, provided that such Transferee
holds not less than an
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aggregate of 20,000 Shares, the Company shall execute and cause to be filed any
document or filing presented to the Company in proper form for signing or
filing, in each case as the Xxxxxxx Funds or the Impax Stockholders or such
Transferee may reasonably deem necessary or desirable in light of the Company's
obligations under this Agreement, and the Company shall pay or cause to be paid
any filing or other fees in connection therewith.
ARTICLE VI
INFORMATION AS TO THE COMPANY
The Company covenants and agrees as follows:
6.1 Financial Information.
(a) The Company will maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in accordance with generally accepted
accounting principles consistently applied.
(b) So long as a holder of Series 1 Preferred owns at least
20,000 Shares, the Company will deliver to such holder the following:
(i) as soon as practicable but not later than five
(5) Business Days after their issuance, and in any event within ninety
(90) days after the close of each fiscal year of the Company, (A) a
consolidated balance sheet of the Company as of the end of such fiscal
year and (B) consolidated statements of operations, stockholders'
equity and cash flows of the Company for such fiscal year, in each case
setting forth in comparative form the corresponding figures for the
preceding fiscal year, all such balance sheets and statements to be in
reasonable detail and certified without qualification by Price
Waterhouse Coopers LLC or any "Big Five" independent public accounting
firm selected by the Company, and such statements shall be accompanied
by a management analysis of any material differences between the
results for such fiscal year and the corresponding figures for the
preceding year; the Company's Annual Report on Form 10-KSB or Form 10-K
(if applicable) shall satisfy such requirement provided that it is in
compliance with all applicable requirements of the SEC and is certified
by a "Big Five" accounting firm;
(ii) as soon as practicable, copies (A) of all
financial statements, proxy material or reports sent to the Company's
stockholders, (B) of any public press releases and (C) of all reports
or registration statements filed with the Commission pursuant to the
Securities Act or the Securities Exchange Act;
(iii) as soon as practicable and in any event within
forty-five (45) days after the close of each of the first three (3)
fiscal quarters of the Company, (A) a consolidated balance sheet of the
Company as of the end of such fiscal quarter,
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(B) consolidated statements of operations, stockholders' equity and
cash flows of the Company for the portion of the fiscal year ended with
the end of such quarter, in each case in reasonable detail, certified
by the Chief Financial Officer, Chief Executive Officer or the
President of the Company and setting forth in comparative form the
corresponding figures for the comparable period one year prior thereto
(subject to normal year-end adjustments), together with a management
analysis of any material differences between such results and the
corresponding figures for such prior period and (C) a certificate of
the Chief Financial Officer, Chief Executive Officer or the President
certifying the Company's compliance with the covenants contained in
Section 6 of this Agreement; the Company's Quarterly Report on Form
10-QSB or Form 10-Q (if applicable) shall satisfy such requirement
provided that it is in compliance with all applicable requirements of
the SEC;
(iv) as soon as practicable and without duplication
of any of the above items, any other materials furnished to the
Company's Board of Directors or to holders of the Company's capital
stock or Indebtedness, including, without limitation, any compliance
certificates furnished in respect of such Indebtedness; and
(v) as soon as practicable, such other information as
may reasonably be requested by any holder of at least 20,000 Shares.
(c) The Company will deliver to each member of the Company's
Board of Directors, as soon as practicable (and in the case of (iii), prior to
the end of each fiscal year) and without duplication of any of the items listed
below, the following:
(i) copies of any annual, special or interim audit
reports or management or comment letters with respect to the Company or
their operations submitted to the Company by independent public
accountants;
(ii) copies of summary financial information prepared
on a quarterly basis regarding the Company on a consolidated basis as
presented to the Board and any other summary financial information
otherwise prepared;
(iii) copies of the annual budget and business plan
for the next fiscal year;
(iv) copies of all formal communications, from time
to time, to directors of the Company (including without limitation all
information furnished to such directors in connection with such
communications), and copies of minutes of meetings of the Board of
Directors (and of any executive committees thereof) of the Company;
(v) notice of default under any material agreement,
contract or other instrument to which the Company is a party or by
which it is bound;
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(vi) notice of any action or proceeding which has
been commenced or threatened against the Company and which, if
adversely determined, would have, individually or in the aggregate, a
material adverse effect on the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis; and
(vii) copies of all filings made with the Commission.
(d) All such financial statements referred to in this Section
6.1 shall be prepared in accordance with generally accepted accounting
principles consistently applied (except for any change in accounting principles
specified in the accompanying certificate, in the financial statements
themselves or required by GAAP, and except that any interim financial statements
may omit notes and may be subject to normal year-end adjustments).
(e) Without limiting the foregoing provisions of this Section
6.1, the Company agrees that, if requested in writing by any holder of Shares,
it will not deliver to such holder (until otherwise instructed by such holder)
(x) any non-public information or non-public materials regarding the Company
(whether described in this Section 6.1 or otherwise) and (y) any information
(whether or not included in clause (x)) which such holder specifies that it does
not want to receive. The Company shall comply with any such request with respect
to each such Investor and any subsequent holders of Shares acquired directly or
indirectly (through one or more transfers) from such Investor, until instructed
otherwise by the then holder of such Shares.
6.2 Communication with Accountants. The Company hereby
authorizes any Series 1 Stockholder to communicate directly with the independent
certified public accountants for the Company and authorizes such accountants to
disclose to such Series 1 Stockholder any and all financial statements and any
other information of any kind that they may have with respect to the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of the Company. The Company shall deliver
a letter addressed to such accountants instructing them to comply with the
provisions of this Section 6.2.
6.3 Inspection. So long as a holder of Series 1 Preferred owns
at least 20,000 Shares, the Company will permit such holder and any authorized
representative of such holder to visit and inspect any of the properties of the
Company, to examine their respective books and records and to discuss with their
officers their books and records and the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or otherwise) or
prospects of the Company, all at such reasonable times, all on reasonable notice
and as often as may be reasonably requested.
6.4 Notices. The Company will give notice to all holders of
Shares promptly after it learns (other than by notice from all of such holders)
of the existence of any of the following:
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(a) any default under any Indebtedness (or under any
indenture, mortgage or other agreement relating to any Indebtedness) which
Indebtedness is in an aggregate principal amount exceeding $250,000 (or the
equivalent thereof in other currencies) in respect of which the Company is
liable;
(b) any action or proceeding which has been commenced or
threatened against the Company and which, if adversely determined, would have,
individually or in the aggregate, a material adverse effect on the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of the Company on a consolidated basis or
the ability of the Company to perform its surviving obligations under the Series
D Purchase Agreements, this Agreement, the Amended and Restated Registration
Rights Agreement or the Series 1 Certificate of Designations;
(c) any dispute which may exist between the Company and any
governmental regulatory body which, in the reasonable opinion of the Company is
reasonably likely to, individually or in the aggregate, materially adversely
affect the normal business operations of the Company or the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis or the ability of
the Company to perform its surviving obligations under the Series D Purchase
Agreements, this Agreement, the Amended and Restated Registration Rights
Agreement or the Series 1 Certificate of Designations; and
(d) if any (i) "reportable event" (as such term is described
in Section 4043(c) of ERISA) has occurred; or (ii) "accumulated funding
deficiency" (within the meaning of Section 412(a) of the Code) has been incurred
with respect to a Pension Plan maintained or contributed to (or required to be
maintained or contributed to) by the Company or any ERISA Affiliate that is
subject to the funding requirements of ERISA and the Code or that an application
may be or has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section 412 of the
Code, in each case with respect to such a Pension Plan; or (iii) Pension Plan
maintained or contributed to (or required to be maintained or contributed to) by
the Company or any ERISA Affiliate has been terminated, reorganized, petitioned
or declared insolvent under Title IV of ERISA; or (iv) Pension Plan maintained
or contributed to (or required to be maintained or contributed to) by the
Company or any ERISA Affiliate has an unfunded current liability giving rise to
a lien under ERISA or the Code; or (v) proceeding has been instituted pursuant
to Section 515 of ERISA to collect a delinquent contribution to a Pension Plan
maintained or contributed to (or required to be maintained or contributed to) by
the Company or any ERISA Affiliate; or (vi) of the Company or its ERISA
Affiliates will or may incur any liability (including any contingent or
secondary liability) to or on account of the termination or withdrawal from a
Pension Plan maintained or contributed to (or required to be maintained or
contributed to) by the Company or any ERISA Affiliate; or (vii) "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the
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Code) in connection with an "employee benefit plan" (as defined in Section 3(3)
of ERISA), maintained or contributed to (or required to be maintained or
contributed to) by the Company or any ERISA Affiliate has occurred.
Such notice (i) with respect to (a), shall specify the nature and period of
existence of any such default and what the Company proposes to do with respect
thereto and (ii) with respect to (b), (c) or (d), shall specify the nature of
any such matter referred to in such clause, what action the Company proposes to
take with respect thereto and what action any other relevant Person is taking or
proposes to take with respect thereto.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties. The Company represents and
warrants to the Series 1 Stockholders that the statements contained in Sections
4.01, 4.02, 4.03 and 4.09 of the Merger Agreement ("Merger Representations") are
true and correct as of the date hereof, except as set forth therein in the Buyer
Disclosure Schedules, attached thereto; provided that all references thereto in
Section 4.03 to "Agreement" shall also include this Shareholders' Agreement and
the Amended and Restated Registration Rights Agreement. Capitalized terms used
in this Section 7.1 and in the Merger Representations and not otherwise defined
in this Agreement have the respective meanings ascribed thereto in the Merger
Agreement.
7.2 Breach of Representations, Warranties and Covenants. (a)
The representations, warranties, covenants and agreements of the Company and the
Series 1 Stockholders contained in this Agreement and the Amended and Restated
Registration Rights Agreement or in any document or certificate delivered
pursuant hereto or thereto or in connection herewith shall survive until March
2, 2001, and shall continue in effect following, the execution and delivery of
this Agreement and the Amended and Restated Registration Rights Agreement, the
Merger, any investigation at any time made by any Series 1 Stockholder or on its
behalf or by any other Person, the issuance, sale and delivery of the Shares,
any disposition thereof and any payment, conversion or cancellation of the
Shares; provided that Article IV shall terminate upon conversion of all of the
Shares (or as earlier provided therein). All statements contained in any
certificate or other document delivered by or on behalf of the Company pursuant
hereto shall constitute representations and warranties by the Company hereunder.
(b) The Company agrees to indemnify and hold the Series 1
Stockholders harmless from and against and will pay to the Series 1 Stockholders
the full amount of any loss, damage, liability or expense (including amounts
paid in settlement and reasonable attorneys' fees and expenses) to the Series 1
Stockholders resulting either directly or indirectly from any breach of the
representations, warranties, covenants or agreements of the Company contained in
this Agreement, the Registration Rights Agreement or any other document or
certificate delivered pursuant hereto or thereto or in connection herewith or
therewith.
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ARTICLE VIII
MECHANICS OF SHARE EXCHANGE, CANCELLATION,
REPLACEMENT AND PAYMENT
8.1 Exchange of Shares. Subject to Article II hereof, at any
time at the request of any holder of Shares to the Company at its address
provided under Section 9.13 hereof, the Company at its expense (except for any
documentary, stamp, transfer or other similar tax arising out of the exchange)
will issue and deliver to or upon the order of the holder in exchange therefor a
new certificate or certificates in such amount or amounts as such holder may
request in the aggregate representing the number of Shares represented by such
surrendered certificates, and registered in the name of such holder or as such
holder may direct.
8.2 Cancellation of Surrendered Shares. Any Share certificate
which is converted into Conversion Shares in whole or in part shall be cancelled
by the Company, and no new Share certificates shall be issued in lieu of any
Shares which have been converted into Conversion Shares. The Company shall issue
a new certificate with respect to any Shares which were not converted into
Conversion Shares and were represented by a certificate which was converted in
part.
8.3 Replacement of Shares. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Share certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory to the Company (if
requested by the Company and unsecured in the case of the Investor or another
similar institutional holder), or in the case of any such mutilation, upon
surrender of such Share certificate (which surrendered Share certificate shall
be cancelled by the Company), the Company will issue a new Share certificate of
like tenor in lieu of such lost, stolen, destroyed or mutilated Share
certificate, as if the lost, stolen, destroyed or mutilated Share certificate
were then surrendered for exchange.
8.4 Direct Payments. As long as a Series 1 Stockholder or any
institutional holder which is a direct or indirect transferee (as a result of
one or more transfers) from a Series 1 Stockholder shall be the holder of any
Shares, the Company will make all redemption payments, liquidation payments and
other distributions by wire transfer to such Series 1 Stockholders's or such
other holder's (or its nominee's) account at any bank or trust company,
notwithstanding any contrary provision herein or in the Company's certificate of
incorporation with respect to the place of payment. The Series 1 Stockholders
have provided an address on Schedule 1 hereto for payments by wire transfer, and
such address may be changed for the Series 1 Stockholders or any subsequent
holder by notice to the Company. All such payments shall be made in U.S. dollars
and in federal or other immediately available funds.
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ARTICLE IX
MISCELLANEOUS
9.1 Governing Law. This Agreement shall be governed and
construed in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
9.2 Entire Agreement. Except as contemplated by the Merger
Agreement, the Series 1 Certificate of Designations and the Amended and Restated
Registration Rights Agreement, this Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
and preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof, including without limitation, the Series D Purchase Agreements, the
Series D Stockholders' Agreement and the Registration Rights Agreement
(collectively the "Xxxxxxx Series D Transaction Documents"); provided that
Sections 4, 5, 11, 12 and 13 of the Series D Purchase Agreements shall
specifically survive; and provided that the Xxxxxxx Series D Transaction
Documents shall not be superseded until the Effective Time.
9.3 Amendment and Waiver. The terms and provisions of this
Agreement may be amended, modified or supplemented only by a written instrument
duly executed by the holders of at least 80% of the Shares and the Conversion
Shares then outstanding. The failure of any party to enforce any of the
provisions of this Agreement will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
Promptly after obtaining the written consent of the holders as herein provided,
the Company shall transmit a copy of any amendment, waiver, modification or
termination which has been adopted to all holders of Series 1 Preferred and
Conversion Shares then outstanding, but failure to transmit copies shall not in
any way affect the validity of any such amendment, waiver, modification or
termination.
9.4 Fees and Expenses. (a) Whether or not the transactions
herein contemplated are consummated, the Company shall pay (i) the costs, fees
and expenses of Xxxxxx, Xxxxx & Xxxxxxx LLP in connection with the Series 1
Certificate of Designations, this Agreement, the Registration Rights Agreement,
other related documentation and the transactions contemplated hereby and
thereby, and if the Merger occurs the Company will make such payment at the
Effective Time; provided, however, that (x) such fees and expenses shall not, in
the aggregate, exceed $25,000 without the approval of the Company and (y) in the
event that the Merger does not occur (other than as a result of a breach by the
Company of its obligations to the Series 1 Stockholders), the Company shall pay
such fees and expenses upon the termination of negotiations between the Company
and Impax, (ii) the fees and expenses of counsel to the Series 1 Stockholders in
connection with any amendments to or modifications or waivers of any provisions
of the Series 1 Certificate of Designations, this Agreement, the Registration
Rights
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Agreement, other related documentation or in connection with any other
agreements between the Series 1 Stockholders and the Company, and (iii) the fees
and expenses (including attorneys' fees and expenses) of any holder of Shares or
Conversion Shares, in enforcing its rights against the Company if the Company
defaults in its obligations hereunder, under the Series 1 Certificate of
Designations, this Agreement or the Registration Rights Agreement.
(b) In addition to all other sums due hereunder or provided
for in this Agreement, the Company shall pay to the Series 1 Stockholders or
their agents, respectively, an amount sufficient to indemnify such persons (net
of any Taxes on any indemnity payments) against all reasonable costs and
expenses (including reasonable attorneys' fees and expenses and reasonable costs
of investigation) and damages and liabilities incurred by the Series 1
Stockholders or their agents pursuant to any investigation or proceeding against
any or all of the Company, the Series 1 Stockholders, or their agents, arising
out of or in connection with this Stockholders' Agreement, the Registration
Rights Agreement, or purchase of the Shares (or any transaction contemplated
hereby or thereby or any other document or instrument executed herewith or
therewith or pursuant hereto or thereto), whether or not the transactions
contemplated by this Agreement are consummated, which investigation or
proceeding requires the participation of the Series 1 Stockholders or their
agents or is commenced or filed against the Series 1 Stockholders or their
agents because of this Agreement, the Registration Rights Agreement, the
purchase of the Shares or any of the transactions contemplated hereby or thereby
(or any other document or instrument executed herewith or therewith or pursuant
hereto or thereto), other than any investigation or proceeding in which it is
finally determined that there was (i) gross negligence or willful misconduct on
the part of the Series 1 Stockholder or their agents, (ii) a material breach by
the Series 1 Stockholder of any of their representations or warranties contained
herein, (iii) a material breach by Series 1 Stockholder of any provision of any
confidentiality agreement between the Company and the Series 1 Stockholders, in
any case, which was not taken by them in reliance upon any of the Company's
representations, warranties, covenants or agreements in this Agreement, the
Registration Rights Agreement or in any other documents or instruments
contemplated hereby or thereby or executed herewith or therewith or pursuant
hereto or thereto. The Company shall assume the defense, and shall have its
counsel represent the Series 1 Stockholder and such agents, in connection with
investigating, defending or preparing to defend any such action, suit, claim or
proceeding (including any inquiry or investigation); provided, however, that
such Series 1 Stockholder, or any such agent, shall have the right (without
releasing the Company from any of its obligations hereunder) to employ its own
counsel and either to direct its own defense or to participate in the Company's
defense, but the fees and expenses of such counsel shall be at the expense of
such person unless (i) the employment of such counsel shall have been authorized
in writing by the Company in connection with such defense, (ii) the Company
shall not have provided its counsel to take charge of such defense or (iii)
there may be defenses available to such Series 1 Stockholder, or such agent of
such Series 1 Stockholder which are different from or additional to those
available to the Company, then in any of such events referred to in clauses (i),
(ii) or (iii) such counsel fees and expenses (but only for one counsel for such
Series 1 Stockholder and its agents) shall be borne by the Company. Any
settlement of any such action, suit, claim or proceeding shall require the
consent of both the
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Company and such indemnified person (neither of which shall unreasonably
withhold its consent).
(c) The Company agrees to pay, or to cause to be paid, all
documentary, stamp and other similar Taxes, other than transfer taxes payable
upon the transfer by any Series 1 Stockholder of Shares to a Transferee, levied
under the laws of the United States of America, any state or local Taxing
Authority thereof or therein or any other applicable jurisdiction in connection
with the issuance and sale of the Shares and the execution and delivery of this
Agreement, the Registration Rights Agreement and any other documents or
instruments contemplated hereby or thereby and any modification of the Series 1
Certificate of Designations, this Agreement, the Registration Rights Agreement
or any such other documents or instruments and will hold the Series 1
Stockholders harmless without limitation as to time against any and all
liabilities with respect to all such Taxes.
(d) The obligations of the Company under this Section 9.4
shall survive the Effective Time hereunder and any termination of this
Agreement.
9.5 Consent to Jurisdiction. The Company hereby consents to
the jurisdiction of any state or federal court located within the County of New
York, State of New York and irrevocably agrees that, subject to the purchaser's
election, all actions or proceedings relating to this Agreement, the Series 1
Certificate of Designations, the Shares or the Conversion Shares may be
litigated in such courts. The Company accepts for itself and in connection with
its properties, generally and unconditionally, the nonexclusive jurisdiction of
the aforesaid courts and waives any defense of forum non conveniens, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, the Series 1 Certificate of Designations, the Amended and
Restated Registration Rights Agreement, the Shares or the Conversion Shares. The
Company designates and appoints CSC, the United States Corporation Company, and
such other persons as may hereafter be selected by the Company and which
irrevocably agree in writing to so serve as its agent, to receive on its behalf
service of all process in any such proceeding in any such court, such service
being hereby acknowledged by the Company to be effective and binding service in
every respect. A copy of any such process so served shall be mailed by
registered mail to the Company at the address of the Company provided hereunder
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. As an alternative
to service of process on such agent (whether or not any such agent has been
appointed), the Company hereby agrees that service upon it by mail shall
constitute sufficient notice and service of process. Nothing herein shall affect
the right to serve process in any other manner permitted by law or shall limit
the right of the purchaser to bring proceedings or obtain or enforce judgments
against the Company in the courts of any other jurisdiction.
9.6 Waiver of Jury Trial. The Company and the Series 1
Stockholders hereby waive their respective rights to a jury trial of any claim
or cause of action based upon or arising out of this Agreement, the Series 1
Certificate of Designations, the Amended and Restated
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Registration Rights Agreement, the Shares or the Conversion Shares, or any
dealings between them relating to the subject matter of this transaction. The
Company and the Series 1 Stockholders also waive any bond or surety or security
upon such bond which might, but for this waiver, be required of the purchaser.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including, without limitation, contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. The
Company and the Series 1 Stockholders further warrant and represent that each
has reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. This waiver is irrevocable, meaning that it may not be modified either
orally or in writing, and this waiver shall apply to any subsequent amendments,
renewals, supplements or modifications to (or assignments of) this Agreement,
the Series 1 Certificate of Designations, the Amended and Restated Registration
Rights Agreement, the shares or the conversion shares. In the event of
litigation, this agreement may be filed as a written consent to a trial (without
a jury) by the court.
9.7 Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, personal representatives,
successors and assigns and be enforceable by the Series 1 Stockholders and any
permitted transferees of the Company Stock held by the Series 1 Stockholders,
whether so expressed or not; provided, that (a) the Company may not assign any
of its rights, duties or obligations under this Agreement, except with the
applicable Series 1 Stockholder's written consent, and (b) the applicable Series
1 Stockholder may assign, in whole or in part, any or all of its rights, duties
or obligations under this Agreement to a purchaser of any or all of its Shares
or Conversion Shares, provided that such purchaser is reasonably acceptable to
the Company and such transfer is in accordance with Article II hereof, and
(unless such assignment expressly provides otherwise) any such assignment shall
not diminish the rights such Series 1 Stockholder would otherwise have under
this Agreement or with respect to any remaining Shares or Conversion Shares held
by the Series 1 Stockholder.
9.8 Remedies. In the event of a breach by any party to this
Agreement of its obligations under this Agreement, any party injured by such
breach, in addition to being entitled to exercise all rights existing in their
favor, will be entitled to enforce their rights under this Agreement
specifically (without posting a bond or other security), to recover damages and
costs (including attorney's fees) by reason of any breach of any provision of
this Agreement. The parties hereto agree and acknowledge that money damages may
not be an adequate remedy for breach of the provisions and obligations of this
Agreement and that, in addition to the other remedies it may have, any Investor
may in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violation of the provisions of this Agreement. If any
party hereto shall institute any action or proceeding to enforce the provisions
hereof, any person (including the Company) against whom such action or
proceeding is brought hereby waives the claim or defense therein
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that such party has an adequate remedy at law, and such person shall not urge in
any such action or proceeding the claim or defense that such remedy at law
exists.
9.9 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
9.10 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
9.11 Gender. Whenever the pronouns "he" or "his" are used
herein they shall also be deemed to mean "she" or "hers" or "it" or "its"
whenever applicable. Words in the singular shall be read and construed as though
in the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
9.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
9.13 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission (with
confirmation thereof) or mailed by prepaid first class mail, return receipt
requested, or mailed by overnight courier prepaid to (i) the Company, at 00000
Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000, Facsimile No.: (000) 000-0000, with a copy
to each of (I) the Law Offices of Xxxxxx X. Xxxxxx, 0000 Xxxx Xxxxxxxx Xxxx,
Xxxxx 00X, Xxxxxxx Xxxx, XX 00000, Attention: Xxxxxx X. Xxxxxx, Esq. and (II)
Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000,
Attention: Xxxxxxx X. Xxxxxxxx, Esq. or to (ii) any Series 1 Stockholder or any
subsequent holder of shares of Company Stock subject to this Agreement, to the
address of such holder as indicated by the Company's records, or at such address
or to the attention of such other person as the recipient party has specified by
prior written notice to the sending party, with such copies to such persons as
specified by the Company or the Series 1 Stockholder. Any party from time to
time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other parties hereto.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
GLOBAL PHARMACEUTICAL CORPORATION
By: __________________________________
Name:
Title:
XXXXXXX US DISCOVERY FUND III, L.P.
By: XXXXXXX US DISCOVERY PARTNERS, L.P.,
its general partner
By: XXXXXXX US DISCOVERY, LLC,
its general partner
By:_____________________________
Xxxxxx X. Xxxx, member
XXXXXXX US DISCOVERY OFFSHORE FUND III, L.P.
By: XXXXXXX US DISCOVERY PARTNERS, L.P.,
its general partner
By: XXXXXXX US DISCOVERY, LLC,
its general partner
By:_____________________________
Xxxxxx X. Xxxx, member
[Signature Page to Stockholders' Agreement]
CHINA DEVELOPMENT INDUSTRIAL
BANK, INC.
By: __________________________
Name:
Title:
PRESIDENT (BVI) INTERNATIONAL
INVESTMENT HOLDINGS, LTD.
By: __________________________
Name:
Title:
CHEMICAL COMPANY MALAYSIA (BERHAD)
By: __________________________
Name:
Title:
EUROC II VENTURE CAPITAL CORP.
By: __________________________
Name:
Title:
EUROC III VENTURE CAPITAL CORP.
By: __________________________
Name:
Title:
MULTIVENTURE TECHNOLOGIES, INC.
By: __________________________
Name:
Title:
TAI-I ELECTRIC WIRE & CABLE CO., LTD.
By: __________________________
Name:
Title:
[Signature Page to Stockholders' Agreement]
With respect to the obligations
contained in Article III hereof
only:
KEY SENIOR EXECUTIVES
--------------------------------------
Xxxxxxx Xxxxx
--------------------------------------
Xxxxx Xxx
--------------------------------------
Xxxxx X. Xxxxxxx
[Signature Page to Stockholders' Agreement]
Schedule 1
to the Stockholders' Agreement
SERIES 1 STOCKHOLDERS
Number of shares Series 1
Convertible Preferred Stock
Name of Series 1 Stockholder (at the Effective Time)
---------------------------- ---------------------------
XXXXXXX US DISCOVERY FUND III, L.P. 43,093
XXXXXXX US DISCOVERY OFFSHORE FUND III, L.P. 6,907
CHINA DEVELOPMENT INDUSTRIAL BANK, INC. 55,000
PRESIDENT (BVI) INTERNATIONAL INVESTMENT 55,000
HOLDINGS, LTD.
CHEMICAL COMPANY MALAYSIA (BERHAD) 40,000
EUROC II VENTURE CAPITAL CORP. 4,000
EUROC III VENTURE CAPITAL CORP. 8,000
MULTIVENTURE TECHNOLOGIES, INC. 3,000
TAI-I ELECTRIC WIRE & CABLE CO., LTD. 5,000
Schedule 2
to the Stockholders' Agreement
HOLDERS OF EXECUTIVE SHARES
Number of Shares of Common Stock
Name of Key Senior Executive (at the Effective Time)
---------------------------- --------------------------------
Xxxxxxx Xxxxx 3,341,864
Xxxxx Xxx 1,940,828
Xxxxx X. Xxxxxxx 1,000
Schedule 3
to the Stockholders' Agreement
INVESTMENTS
1. 213,767 shares of Common Stock of Josman Laboratories, Inc.
Schedule 4
to the Stockholders' Agreement
INDEBTEDNESS
1. $5 million revolving credit facility with General Electric Capital
Corporation ("GECC").
2. Loan from Pennsylvania Industrial Development Authority ("PIDA") commencing
June 1, 1994, paid in monthly installments of $6,602 through May 1, 2009.
3. Loan from Philadelphia Industrial Development Corporation ("PIDC") payable in
monthly installments of $3,672 commencing January 1, 1994, with a balance of
$304,000 due on December 1, 2000.
4. Loan from PIDA payable in 180 monthly installments of $5,513, commencing
September 1, 1997, through August 1, 2012.
5. Loan from the Delaware River Port Authority ("DRPA") payable in 120 monthly
installments of $3,712 commencing September 1, 1997, through August 1, 2007.
6. Indebtedness incurred in connection with the build-out of a commercial scale
manufacturing facility estimated to comprise approximately 20,000 square feet.
Schedule 5
to the Stockholders' Agreement
TRANSACTIONS WITH AFFILIATES
None.
Schedule 6
to the Stockholders' Agreement
LIENS
1. Liens against property, inventory, plant, equipment, receivables and other
assets as they relate to Company indebtedness as listed on Schedule 4.
Exhibit A
Form of Joinder Agreement
[Impax Laboratories, Inc.]
[address]
Ladies and Gentlemen:
In consideration of the [transfer] [issuance ] to the undersigned of
____ shares of Common Stock, $.01 par value per share, [Describe any other
security being transferred or issued] of Impax Laboratories, Inc., a Delaware
corporation (the "Company"), the undersigned, as a Transferee of [insert name of
transferor], agrees that, as of the date written below, [he] [she] [it] shall
become a party to, and a Transferee as defined in, that certain Stockholders'
Agreement dated as of ____, 1999, as such agreement may have been or may be
amended, modified or restated from time to time (the "Agreement"), among the
Company and the persons named therein, and as a Transferee shall be fully bound
by, and subject to, all of the covenants, terms and conditions of the Agreement
that were applicable to the undersigned's transferor, as though an original
party thereto and shall be deemed a [Xxxxxxx Holder] [Impax Holder] for purposes
hereof.
Executed as of the ___ day of _____, ____.
TRANSFEREE:_________________
Address:_______________________
Exhibit B
FORM OF SERIES 1 CERTIFICATE OF DESIGNATIONS
Exhibit C
FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
